The proposed research is aimed at developing a new molecular recognition technology for drug discovery. Stable liposome-based biosensors, called Biosomes TM, turn from blue to red in response to a specific molecular recognition event. The Biosomes can be functionalized with a specific receptor ligand or enzyme substrate so that they respond specifically to a particular receptor or enzyme. Our aim is to develop either a prototypic receptor binding or enzyme assay using the Biosome TM technology in high- throughput screening to detect potential drug leads. In Phase II, this technology will be expanded to additional receptor and enzyme assays of interest to the pharmaceutical industry. These assays will have the advantage of being rapid, homogeneous and non-radioactive. Specifically, we will examine stability and specificity of the Biosomes TM, optimize the assays to detect inhibitors, and determine reproducibility and reliability of the assays. This proposal will enable the development of a new technology which should contribute to the discovery of drugs for a broad range of diseases including psychiatric disorders, inflammatory diseases and cancer. PROPOSED COMMERCIAL APPLICATION: The Proposal is aimed at developing a new technology for drug discovery applications. The -technology should result in rapid high-throughput non- radioactive receptor and enzyme assays with an annual market of over $50,000,000 in the pharmaceutical and biotechnology industries.